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Ontario Divisional Court Upholds Denial of Certification of Pharmaceutical Class Action Against AstraZeneca

In a rare and dramatic oral ruling from the bench, the Ontario Divisional Court yesterday upheld the May 7, 2012 decision of Horkins J. in Martin v. AstraZeneca Pharmaceuticals Plc, 2012 ONSC 2744 to deny certification of a proposed national class action relating to the anti-psychotic medicine, Seroquel®. The Divisional Court’s judgment marks the first time that an Ontario appellate court has denied certification of a pharmaceutical or medical device class action against a private defendant, and only the second time that a Canadian appellate court has done so in a common law province.

As discussed in a previous bulletin, the AstraZeneca class action alleged that the three defendant companies were liable for negligently designing, manufacturing and marketing Seroquel®, negligently failing to warn patients that it can cause serious health risks such as weight gain and diabetes, conspiring to conceal those health risks from Health Canada and promoting the medicine for off-label, unapproved uses. Horkins J. delivered a 78-page judgment denying certification on the basis that the plaintiffs failed to meet any of the criteria under s. 5(1) of the Ontario Class Proceedings Act, 1992 (CPA).

The Divisional Court heard oral arguments from February 19-20, 2013 and delivered its judgment dismissing the appeal in open court on February 21. The Divisional Court panel, consisting of Aston, Lederer and Herman JJ., found that the plaintiffs failed to establish a single error in Horkins J.’s carefully reasoned decision. In doing so, the Court agreed not only with Horkins J.’s conclusion that the plaintiffs failed to disclose a cause of action under s. 5(1)(a) of the CPA, but also with her ground-breaking reasons for this. Further, the Court declined to grant the plaintiffs leave to amend their statement of claim given their failure to request this relief before Horkins J., and the lack of evidence to support the common issues.

The Divisional Court also rejected the plaintiffs’ argument that Horkins J. engaged in an impermissible weighing of evidence in finding that they failed to meet the remaining certification criteria in ss. 5(1)(b)-(e). Aston J., who read the Court’s judgment, observed that Horkins J. was entitled to scrutinize the plaintiffs’ evidence in order to discharge her gatekeeping role, including the cross-examinations of their experts.

Finally, the Divisional Court affirmed the costs decision of Horkins J., in which she awarded the defendants costs of approximately $725,000. Of note, the Court held that Horkins J. did not err in taking into account the fact that plaintiffs’ counsel agreed to indemnify the plaintiffs for a costs order.  In its view, Horkins J. did not use the existence of the indemnity agreement to award the defendants a higher level of costs, but rather to find that the plaintiffs’ argument that this award would have a chilling effect on a disadvantaged group of people lacked merit. The Court also held that the fact Horkins J.’s order set a new "high-water mark" for costs awarded to defendants was not itself a reason to interfere with it.

The AstraZeneca defendants were represented on appeal and at certification by McCarthy Tétrault LLP partners Frank J. McLaughlin and Brandon Kain, and by Gilbert’s LLP partner Sarah Chesworth.